On March 24, 2020, the U.S. Department of Labor (DOL) issued its first official guidance for employers and workers about the emergency paid-leave provisions of the Families First Coronavirus Response Act, which was signed into law on March 18, 2020. The Act provides for emergency paid sick leave (EPSL) and emergency paid Family and Medical Leave Act benefits (EPFMLA) for specified reasons related to COVID-19, applicable to public employers and private sector employers with fewer than 500 employees (see our previous alert summarizing the Act.)

This alert summarizes a number of the key points for employers that were addressed by the DOL guidance:

Effective Date:  The DOL clarified that the Act’s paid leave provisions will become effective on April 1, 2020, not April 2 as previously thought, and will apply to leave that is taken between April 1, 2020 and December 31, 2020, when the law expires.

Notice Requirement:  The DOL also published the poster that employers must post and provide to employees to notify them of their rights under the Families First Coronavirus Response Act. In this telecommute era, we suggest emailing it to employees. (Here is a link to the poster.)

Calculating Hours of Leave Required for Part-Time Employees: Under the Act, part-time employees are entitled to EPLA and EPFMLA for their average number of work hours in a two-week period. Consequently, employers will need to calculate hours of leave based on the number of hours the employee is normally scheduled to work. If those normal hours are unknown, or the employee’s hours vary, employers may use a six-month average to calculate the average daily hours. The part-time employee is entitled to take: (1) paid leave for that number of hours per day for up to two weeks, and (2) expanded family and medical leave for the same number of hours per day up to ten weeks after that.

Inclusion of Overtime Hours in Pay Calculation: An employee must be paid for hours the employee would have been normally scheduled to work even if that exceeds 40 hours in a week. Although paid leave has to include overtime hours, the DOL also confirmed that EPSL is capped at 80 hours over a two-week period. So, for example, an employee typically scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week, subject to the cap. Moreover, for purposes of EPSL and EPFMLA, pay does not have to include any premiums for overtime hours.

Regular Rate of Pay:  The guidance confirms that an employer must pay its employees at their FLSA regular rate of pay (or 2/3 that regular rate, depending on the reason for which leave is taken).

Eligibility for Paid Leave to Care for Children Whose School or Place of Care is Closed: Employees may be eligible for both categories of paid leave if they must remain at home with their children whose school or place of child care is closed for COVID-19 related reasons. Notably, the DOL also confirmed that even if an employee may be eligible for both types of leave, a maximum of 12 weeks of paid leave applies in this instance.

Taking Advantage of the Small Business Exemption: The Act also provides that employers with fewer than 50 employees and for whom compliance with the Act’s paid leave requirements would jeopardize its business, may be able to obtain a small business exemption. While this initial guidance states only that employers seeking to elect this exemption should document why their business meets the criteria set forth by the DOL, forthcoming regulations will provide greater detail on qualifying for the small business exemption.

Coverage Assessment:  The provisions of the Act apply to public employers, and private employers with fewer than 500 employees. The DOL has clarified how an employer should calculate the 1-499 employee threshold for purposes of the Act:

1. When to calculate: Employers should calculate the number of employees  at the time an employee’s leave is to be taken. This means that if the employer’s workforce varies above and below the 500 employee threshold the determination of coverage should be made each time an employee takes protected leave under the Act.
2. Who to include in the calculation:
   1. Generally:  In calculating whether an employer has 499 or fewer employees, the following categories of employees are to be taken into account:
      • Only employees who are located within the United States, or any Territory or possession of the United States
      • Full and part-time employees
      • Employees on leave
      • Temporary employees who are jointly employed by the employer and another company (regardless of whether the jointly-employed employees are maintained on only one or another employer’s payroll)
      • Day laborers supplied by a temporary agency (regardless of whether the employer or the temporary agency or the client firm if there is a continuing employment relationship).

Workers who are independent contractors under the Fair Labor Standards Act are not counted.

1. 2. For Corporations:  A corporation (including its separate establishments or divisions) is treated as a single employer and all of its employees must be counted toward the threshold. Where a corporation has an ownership interest in another corporation, the two corporations are viewed as separate employers unless they are joint employers under the Fair Labor Standards Act with respect to certain employees.
       

If two entities are found to be a joint employer, all of their common employees must be counted for purposes of determining whether EPSL and EPFMLA leave must be provided.
In addition, the DOL adopted the “integrated employer” test under the Family and Medical Leave Act of 1993 (FMLA) to determine if two or more entities will be treated as separate or combined employers for EPFMLA. Those factors include common management, interrelation between operations, centralized control of labor relations, and the degree of common ownership/control. See 29 CFR 825.104(c)(2).  If two entities constitute an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of EPFMLA requirements.

Additional guidance on the Act can be found on the DOL’s website at https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.

We are monitoring other changes employers are facing in this coronavirus new world. For further information, contact any member of our COVID-19 team which includes Kathryn Hindman, Maryann Yelnosky, Francis Barnwell, Kent Pearson (Labor Law), and Kara Backus (Employee Benefits).